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Comment by abluecloud | Hacker News Reader

Because their stocks have been over valued for a while now. This is basically the market adjusting to what it should have been.

Check here: http://www.bloomberg.com/quote/SHCOMP:IND with 1 year comparison.

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Looking at the 5y chart I have to ask: what happened in June '14? That appears to be the more extraordinary date.

It looks like the Chinese government was telling everyone to go and buy stocks.

http://www.bloomberg.com/news/articles/2014-09-03/china-s-st...

Chinese have a cultural bias to save money. This was a problem in the past because vast quantities of cash were stuck in the "mattress" sort of speak. They encouraged people to invest their money in stocks, and that led to the bubble that is crushing now.

There is also a culture of snobbery that drives up savings rates. The dearth of available women means that men have to stand out to be worthy of a bride, and many women will barely consider men who don't even own homes. When so much saving takes place just for the hope of starting a family someday, there should be little surprise that only scraps remain for consumption.

It's not cultural. It was triggered by the smashing of the iron rice bowl.

If anyone is as puzzled as myself : https://en.wikipedia.org/wiki/Iron_rice_bowl

No, I'm a chinese person born in the US, I can confirm it's cultural. My father is from Asia and he sometimes looks down on "stupid/uneducated" Westerners for not saving their money. The irony is that if the the typical chinese person was "educated" they'd know that a functioning economy needs people to spend.

>a functioning economy needs people to spend

Agreed, as long as people don't spend money they don't have :-)

You could be saving too much (example: China with 30-50% income saved) or not saving enough (example: the US, with saving levels around 5%, was actually negative before the Great Recession)

Neither option is particularly good for the economy, but if I had to choose, I'd rather over-save than over-spend.

Are index funds a thing in China? E.g. Vanguard style.

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